Entrepreneur—a Jockey or a Horse Owner?

Up until recently, researchers have assumed that when individuals found a firm, they run it personally. The empirical evidence, however, suggests that a significant share of entrepreneurs delegate firm operation to a hired CEO at the time of founding. Yet we know little of how founders choose between running a firm personally and hiring a manager. The literature suggests that entrepreneurs may be strongly attracted to management by non-pecuniary benefits. We use fine-grained data on entrepreneurs in Denmark to examine what motivates founders to operate their firms personally as opposed to hiring a manager. Our findings imply that, while non-pecuniary motives play a role in founders’ decisions, opportunity cost of management and relevant skills are also important.

Zoom link: https://eur-nl.zoom.us/j/92711163225